Palm's Q4 losses expected to double

The cost of a Palm V or m100 has come down as the company tries to cope with a big drop in sales
Written by Graeme Wearden, Contributor

Handheld computer manufacturer Palm announced on Friday that it expects to make a loss of between £120m and £133m in the fourth quarter of its fiscal year -- double previous estimates.

The losses are due to a dramatic drop in predicted sales in the quarter -- between April and June this year. Palm had previously predicted that revenues for the quarter would be between £210m and £220m, but it has now said that the true figure will be between £98 and £112. It made a £9m profit in the same quarter last year.

Palm admitted earlier this month that sales in April were down 20 percent compared to January, and the company appears to have had problems launching its m500 range of PDAs. "Our new m500 family of handheld computers is shipping in volume later than we had hoped, precluding the opportunity for distributors, retailers and resellers to reorder in our fourth quarter," said Carl Yankowski, Palm's chief executive, adding that the delay had also affected sales of existing Palm handhelds.

Yankowski also claimed that sales have been hit by an economic slowdown, which be believes has "spread beyond the U.S."

The company is taking action to try and encourage people to buy its older models. The Palm Vx has been reduced from £299 to £249 and the m100 from £129 to £99.99. Palm has no immediate plans to extend this price-cutting, although its possible that resellers could launch their own promotions. Palm has warned that it will be taking a charge of £210m to cover excess inventory stocks.

Back in March Palm warned that it was going to cut between ten and 15 percent of its workforce, in an attempt to cope with a sharp downturn in demand for its products. A company spokeswoman assured ZDNet News that there are no plans for any further redundancies.

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